Post Magazine & Insurance Times
1 September 2011 Editions
Prepared by
Eleanor Mole
Bid assistant, BLM London
Post Magazine
News
Crash-for-cash hotspots
Aviva u-turns on single brand policy with QMH
Axa blames injury claims for motor reserve top-ups
Clinicians call for a whiplash consensus
Feature articles
News analysis: Admiral battens down the hatches
Admiral has been the darling of the stock market for a number of years but, despite record pre-tax profits, its share price took a tumble last week. Post Magazine finds out why.
Comment – mutuals: Public preference
Mutuals can be overlooked or underused by public bodies, but Allan Guest (chairman of the boards at UMAL and its partner intermediary UMSL) argues that they are the most cost-effective and appropriate choice for public sector risks.
Broking – travel: Tailored travel
Brokers are struggling to keep pace in the travel insurance market, as aggregators take an ever-increasing share of the sector. Post Magazine investigates the future of intermediaries in this highly competitive arena.
Fraud – pet insurance: Vetting animal claims
Animal-related fraud is on the increase, with exaggerated claims for treatment a common cause. Claire Laver (partner) and Carys Clarke (solicitor) from BLM comment.
Business interruption – recessionary impact: Predicting the unpredictable
An uncertain economic climate is making the quantification of business interruption claims even more problematic. Post Magazine explains.
Insurance Times
News
‘Long way to go’ for Ageas despite £34.5m profit hike
JLT knocks Willis out of the top three and takes second place in Top 50 list
Banning referral fees could ‘do more harm than good’
Leader: It’s gone way beyond referral fees now
Broker bodies raise alarm over cost of new regulator
Feature articles
IT Investigates: NFU Mutual reaps a bad harvest
With a huge year-on-year profit slump, internal wrangling and the competition ready to pick off dissatisfied customers, the rural insurer needs to act.
Groupama interview: François-Xavier Boisseau and Laurent Matras, Groupama
In their first ever joint interview, the Groupama top two talk first-half results, misery in the commercial market, and being honest with your shareholders.
IT Spotlights claims: The casebook
The recent insurance-related legal judgments and what they mean for the sector. Cases include: Ben Woodham v JM Turner (T/A Turners of Great Barton) [2011], Mansfield v Mansfield [2011] and Mohammed Najib v John Laing Plc.
IT Spotlights claims: Are the riots a game changer?
As the ABI estimates that the bill for the UK riots will end up close to £200m, experts predict calls to reform the law.
Crash-for-cash hotspots
For the sixth consecutive quarter Birmingham has been named the number one hotspot for crash for cash insurance Fraud by the Insurance Fraud Bureau.
The IFB looked at 128 million insurance records to produce the league table that named Birmingham as the worst place in Britain, followed by Sheffield and Manchester.
The 20 worst places for crash for cash fraud are:
Birmingham, Sheffield, Manchester, Nottingham, Cardiff, Liverpool, Newcastle-upon-Tyne, Leicester, Bristol ( BS ), London South-East, London East, Coventry, Glasgow, London North, Peterborough, Leeds, Brighton, Reading, Guildford, Portsmouth.
The IFB said it has 29 live organised insurance fraud operations with 17 different Police forces, focused on fraud valued at approximately £59.5m, with new operations currently being formed. Many of these operations involve crash for cash activities.
It said its work to date had resulted in more than 486 arrests, 119 criminal convictions and sentences of more than 91 years imprisonment, for trials that have concluded so far. It is said it currently also working on activity to liquidate the assets of insurance fraudsters.
Glen Marr, director of the IFB said: "We use our powerful analytical software to interrogate a significant level of industry data, which includes that relating to insurance claims. This provides the insurance industry with unique capability to identify insurance fraudsters, link parties together, to include professionals that are assisting this criminal activity, and ultimately disrupt their illegal activities."
"Experience has demonstrated that it requires a sustained collective industry effort to reduce the incidence of this type of fraud, and that is precisely what is in place.
"Insurers have invested heavily in reducing insurance fraud, to include ‘crash for cash'. This investment is also being supported by consumers, who intolerant of insurance fraud and the criminals associated with such, are taking a stand by reporting suspicions to their own insurers and to the industry fraud Cheatline managed by the IFB.
"It is estimated that undetected insurance fraud costs the industry up to £2bn a year, adding, on average, an extra £44 a year to the insurance bill for every UK policyholder. Consumers should not be subsidising the actions of criminals and the industry is committed to rooting out fraudsters.
Aviva u-turns on single brand policy with QMH
Aviva’s UK retail director Steve Treloar has vowed to expand new car insurance brand Quote Me Happy into the household market.
The move appears to be a u-turn on Aviva’s single-brand policy, launched with a fanfare three years ago when the Norwich Union name was dropped to a public outcry.
The online-only brand, which is aimed at lower-risk motorists aged between 21 and 75, went live last week (www.postonline.co.uk/2104236) in a bid to provide an outlet for the growing number of consumers who prefer to use aggregators rather than buy direct.
Mr Treloar explained that the Quote Me Happy trading name was developed with the express intent of moving away from Aviva branding and to facilitate a “different” approach in which customers can self-serve.
He said: “Quote Me Happy is essentially a trading name, we want it to be different and our expectation is that the vast majority of business will come via the aggregator route, not direct.
“We are definitely looking to expand the brand — home would be a logical next step. We will be sticking to the personal lines side and developing ways in which to push it forward.”
Mr Treloar stressed that the multi-brand strategy is something that is becoming increasingly important, citing Admiral as an example of another firm where the approach has proved successful.
He added: “The approach of having multiple brands is not unusual, it is a strategy that has become increasingly important and widely adopted.”
In 2008, Aviva spent £9m on an advertising campaign — led by Bruce Willis — to scrap the Norwich Union brand in favour of a single Aviva brand. At the time it said the Aviva brand was only recognised by 20% of the UK population if prompted. It now claims a 58% spontaneous awareness and an 84% combined spontaneous and prompted brand awareness in the UK.
Aviva is also keen to point out that it has also been ranked the 9th most valuable brand in the UK by the 2010 Brand Finance Global 500 Survey.
David Macmillan, Aviva’s UK GI chief executive officer, told Post last month: “When we started our journey with Aviva it was largely a corporate brand in the UK and recognition was at around 4% to 5%. It’s now probably double the level of RSA or More Than, Zurich or Axa and the same level as Direct Line. In terms of brand recognition, the two of us sit way ahead of the pack.”
When asked if an increased reliance on the aggregator channel is likely to cause friction with broking partners, Mr Treloar stated that discussions with brokers are ongoing. “We continue to talk closely with our brokers. They are reasonably comfortably with the path we are taking and support us as we continue to grow to meet the challenges ahead,” he said.
An Aviva spokesman would not comment on whether it would launch further non-Aviva brands.
Axa blames injury claims for motor reserve top-ups
Axa has denied its need to top-up motor claims reserves for the last five years is because of its acquisition of Swiftcover, blaming instead high claims costs.
Axa had reserve surpluses of between 25.2% and 32.7% from 2001 to 2005. For each year from 2006 to 2010, it reported having to make up deteriorated reserves by as much as 46.9%. Axa announced its acquisition of Swiftcover in 2007.
Sarah Vaughan, motor director at Axa Personal Lines, said the Swiftcover acquisition was irrelevant to the state of reserves in the past 10 years and that it was the rising cost of claims that affected reserves.
She explained: “The timing of the reserves relates more to claims because of the three year statute of limitation. In more recent tradition, the reserves have been driven by changing injury claims behaviour which we are seeing across the market.
“There are more and more claims and higher costs. We see people referring customers on to make a claim. What the market as a whole saw was a lot of small injury claims that we thought were closed and dealt with, re-opened. It is down to injury experience on increasing claims costs.”
Clinicians call for a whiplash consensus
Leading clinicians are set to call for a new consensus in tackling the whiplash culture in the UK at a conference in November.
Rehab firm HCML hopes a conference on 2 November at the King’s Fund in London will produce a consensus document to be presented to the government and the insurance industry.
Speakers will be calling on the industry to agree on how diagnosis, claims and treatment could be changed and for techniques already used in other countries to be adopted to stop the UK becoming “the whiplash capital of the world”.
Conference chair Dr Nick Kendall, an expert in the diagnosis and treatment of soft tissue injuries, told Post: “There is an urgent need to re-examine commonly held assumptions about whiplash from diagnosis to treatment, and ask the industry: is there a better way?”
He added that the UK needs to learn from experiences in other countries and that the conference will produce a position statement and recommendations for three main areas that it believes the government and insurance industry should adopt.
The conference will discuss using diagnosis based on the Bone and Joint Decade (2000 to 2010) Task Force on neck pain and its associated disorders.
It will also look at claims and attribution and whether conference delegates agree there are limitations to the current medico legal and biomedical assessment of whiplash.
In addition, treatment and rehabilitation will be up for debate, and whether there is support for the initial medical assessment professional case management approach using active rehabilitation.
“Whiplash has become a significant problem in the UK, with nearly 1200 new cases every day, despite improved road and vehicle safety and fewer slight injuries reported by the police,” said Dr Kendall.
“This has led to considerable debate about what is going on in three main areas: injury prevention; the claim process; and medical management. Clearly none has tackled the problem effectively to date, alone or in combination.”
He added: “The purpose of this forum will be to re-examine these major areas and to identify more effective ways of dealing with any type of neck pain associated with a road traffic accident.”
‘Long way to go’ for Ageas despite £34.5m profit hike
Chief executive Barry Smith outlines major second-half targets for the insurer.
There is still much work to be done at Ageas UK despite an impressive first-half performance, according to chief executive Barry Smith.
The insurance group’s profit before tax jumped four-fold to £34.5m in the first half of 2011, from £8.4m in the same period last year. The company also recorded a 3.5 percentage point improvement in combined ratio, to 101.2% in the first half of 2011 from 106.5% in the comparable 2010 period.
A particular highlight was the 12.1 point drop in Ageas’s motor combined ratio, to a profitable 96.9% from a loss-making 109%.
“We still have a long way to go in terms of our objectives for this year,” Smith said. “Plainly the second half of this year is going to be as significant as the first.”
Outstanding tasks include completing the transfer of the Tesco Underwriting joint venture, to continue expanding distribution arrangements for non-life and protection products, and completing the integration of Castle Cover and Kwik-Fit into the retail broking division.
A further objective is to continue improving the company’s technical risk analysis. “Yes, we need to have a market profile, yes we need to deliver on service, but the technical capabilities in terms of how we look at risk as well as how we make sure we are maintaining the quality of our earnings is also critical,” he said.
Also on Smith’s to-do list is further growth in Ageas’s commercial lines book. Ageas grew its commercial gross written premium by 32.5% to £106.3m from £80.2m. He admits this will be tough, however, given soft commercial rates.
“From a strategic viewpoint, there is no doubt at all about our commitment to increase our presence in the commercial market,” he said. “The question as ever is: how do you go about that, especially at a time when margins in the commercial market are quite thin?”
JLT knocks Willis out of the top three and takes second place in Top 50 list
Order of top three brokers is overturned for first time since 2008 by growing JLT.